THE FEDERAL LAND BANK OF BALTIMORE, APPELLANT,v.ROBERT SUSTRIK AND PRISCELLA SUSTRIK. THE FEDERAL LAND BANK OF BALTIMORE V. ROBERT M. SUSTRIK AND PRISCELLA J. SUSTRIK. APPEAL OF MIKE SUSTRIK, JR. AND IRENE SUSTRIK, HIS WIFE, EXCEPTANTS

Appeal from the Judgment and Order of the Court of Common Pleas, Civil Division, of Washington County at Nos. 84 September Term, 1984 A.D., 1 February Term, 1985 E.D., and 3 May Term, 1985 E.D.

This case involves cross-appeals from a dismissal by the Court of Common Pleas of Washington County of the exceptions to its order of September 4, 1986, which was reduced to judgment on October 4, 1986. We affirm and modify.

Our review begins with the September 7, 1984 filing of a civil complaint by The Federal Land Bank of Baltimore ("Bank") at No. 84 September Term, 1984 A.D. charging Robert M. Sustrik and Priscella J. Sustrik, his then wife, with failure to honor a 1982 note in the amount of $37,500.00. The money was also secured by a purchase money mortgage on realty hereinafter known as the Ames Farm. Suit was brought under the note and not the mortgage.

[ 367 Pa. Super. Page 584]

Because divorce proceedings had been commenced by the time the complaint had been filed, separate responses were submitted on behalf of Robert and Priscella, the substance of which is not herein relevant.

A trial was held on November 5, 1984, the result of which culminated in counsel for all parties acknowledging that the Bank was entitled to judgment in the amount of $45,565.54. Further, at the commencement of the proceedings, counsel for Robert advised those present that, despite not being named in the pleadings, he was noting his appearance for Michael and Irene Sustrik, Robert's parents, and lodging an objection in that:

The Bank's recovery should have been limited to the amount of money due it as of the time an offer to purchase the mortgage from the Bank was made by Michael and Irene "at least one year" previously.

Counsel also asked to be given 45 days to determine the manner in which he wished his exceptions to be decided, i.e., either by appeal or by a petition to open, or whatever other legal procedure he deemed appropriate. It was so granted by the court, and judgment was then entered against Robert and Priscella and in favor of the Bank.

On February 1, 1985, the Bank filed a Praecipe For Writ Of Execution with the prothonotary (No. 1 February Term, 1985 E.D.) directing the sheriff of Washington County to sell a tract of land ("West Pike Run Township Farm") that, although titled to Robert and Priscella, was subject to a 1973 mortgage recorded in the names of Michael and Irene as mortgagees.

In a separate affidavit, the Bank listed those individuals of record having an interest or lien in the property to be sold, e.g., counsel for Priscella in her divorce action ("Attorney Kusturiss") and Robert's parents, Michael and Irene. See Pa.R.Civ.P. 3129(a)(2).

The sale of the West Pike Run Township Farm on April 12, 1985 caused the filing of exceptions by Michael and Irene to the sheriff's proposed schedule of distribution. Rule 3136(d).

[ 367 Pa. Super. Page 585]

The sale netted $41,000.00 and, after deducting the sheriff's costs, listed Attorney Kusturiss as having "Lien # 1" in the amount of $4,447.17. Next in line was the Bank, listed as being owed $34,175.06. In their exceptions, it was the contention of Michael and Irene that the court direct that payment be made in the following sequence:

[ 367 Pa. Super. Page 13]

(a) A debt secured by a mortgage dated June 5, 1973, and recorded in the Recorder's Office on June 20, 1973, in Mortgage Book Vol. 784, Page 13 in an amount of $38,000.00, principal plus interest $9,278.39 being interest to date for a total of: $47,278.39

(b) A debt for which a Judgment was ordered on April 27, 1984, and filed in the Prothonotary's Office at No. 348, April Term, 1983, in an amount of $33,000.00, principal plus $3,191.52 being interest to date for a total of: $36,191.52

(c) A sum due Mike Sustrik, Jr. and Irene Sustrik, his wife, for taxes paid under the terms of the mortgage aforesaid: $1,065.65

(d) A sum due Mike Sustrik, Jr. and Irene Sustrik, his wife, for insurance paid under the terms of the mortgage aforesaid: $228.00

(f) Federal Land Bank of Baltimore vs. Robert M. Sustrik and Priscilla J. Sustrik, filed September 7, 1984, for a Judgment entered November 5, 1984.

These same objections were communicated to the sheriff by letter dated April 10, 1985, and were read at the sale.

The record discloses a second Praecipe For Writ Of Execution being filed by the Bank (No. 3 May Term, 1985 E.D.). This resulted in the sheriff's sale of the Ames Farm on July 5, 1985, and the monies generated therefrom were apportioned first to costs, with the balance going to the Bank. Exceptions were again filed by Michael and Irene seeking the same distribution as they had sought earlier (at No. 1 February Term, 1985 E.D.).

[ 367 Pa. Super. Page 586]

Both the Bank and the Sustriks (Michael and Irene) filed petitions seeking the court to direct the sheriff to place the proceeds of the two sales "at interest" pursuant to Pa.R.Civ.P. 3136(g). These were duly granted, as well as an order appointing an auditor to hear evidence on the proper distribution of the proceeds. Id. at (f).

The auditor's report was filed on December 3, 1985, and recounted how Michael and Irene conveyed to their son (Robert) and then daughter-in-law (Priscella) the West Pike Run Township Farm in 1973. As security for payment on the property, Michael and Irene took back a purchase money mortgage in the amount of $38,000.00. This was recorded promptly.

In 1982, Robert and Priscella executed a purchase money mortgage in the amount of $37,500.00 in favor of the Bank with regard to the Ames Farm. This was also recorded.

Prior to the issuance of a decree divorcing Robert and Priscella in 1985, a judgment was entered, pursuant to a confession note (on May 10, 1984 at No. 19 May Term, 1984 D.S.B.), against Robert and in favor of his wife's attorney ("Kusturiss").

Additionally, the report recounted how Michael and Irene filed a complaint in assumpsit (on April 27, 1983 at No. 348 April Term, 1983 A.D.) against Robert and Priscella seeking the recovery of $33,000.00 allegedly loaned to them to purchase the Ames Farm. In the words of the auditor, albeit summary judgment was granted to Michael and Irene and filed on the same date, "no judgment appeared in the Prothonotary's judgment index at the time. It was not until March 1985 that Creditor Sustriks praeciped for judgment pursuant to the Order of April 27, 1984. Pursuant to the praecipe the Prothonotary indexed the judgment."

Further, the auditor recited the Bank's efforts to recoup the monies advanced to Robert and Priscella for the Ames Farm and the resultant default and sheriff's sale, with the attendant exceptions by ...

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